Oil India share sale commences at Rs 510/share; stock falls

MUMBAI: Shares of Oil India were subdued in early trade as the company launched its one-day offer for sale (OFS) today. The government is divesting 10 per cent stake or 6.01 crore shares to raise around Rs 3,060 crore.

The stock has been volatile in the last couple of sessions after the announcement of OFS surfaced. According to dealers, the stock seems to be subdued as traders are selling shares in the open market to buy at the OFS floor price of Rs 510 which is at over 4 per cent discount to the current market price.

According to analysts, valuations of Oil India are attractive as compared to oil majors like ONGC and Reliance Industries. The stock is available at 9x one year forward earnings while ONGC and Reliance Industries are available at 10x and 13x one year forward earnings respectively.

Analysts' opinion is mixed on the OFS. Some are of the view that floor price is fair but 5 per cent discount is not attractive enough.

FII response to OFS may be higher than domestic response and some reservation for retail investors would have been good.

While the growth opportunities for the company may be limited, triggers like freeing of bulk diesel prices to improve upstream companies profits and proposed hike in APM prices to improve sentiment in near term are seen as the major triggers for the OFS.

At 09:40, the stock was at Rs 532.50, down 1.24 per cent, on the BSE. It touched a high of Rs 532.75 and a low of Rs 521.30 in trade today.